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IRJC<br />

Asia Pacific Journal <strong>of</strong> Marketing & Management Review<br />

Vol.1 No. 2, October 2012, ISSN 2319-2836<br />

PROBLEMS AND PROSPECTS OF SMALL SCALE INDUSTRIAL UNITS<br />

(A CASE STUDY OF EXPORTING AND NON – EXPORTING UNITS IN<br />

HARYANA)<br />

ABSTRACT<br />

DR. REETU SHARMA*<br />

*Teaching Associate,<br />

Department <strong>of</strong> Commerce,<br />

Kurukshetra University,<br />

Kurukshetra.<br />

All over the world, the unorganized manufacturing sector is known as Small <strong>and</strong> Medium<br />

Enterprises (SMEs) while in India this is known as SSI defined in terms <strong>of</strong> investment in plant<br />

<strong>and</strong> machinery. During last 50 years, the limit <strong>of</strong> investment has changed from Rs. 5 lacs in the<br />

sixties to Rs. 100 lacs in 1999. Within the SSI sector, two sub segments have been created. : one<br />

for Tiny Units having investment in plant <strong>and</strong> machinery up to Rs. 25 lacs <strong>and</strong> the other for<br />

industry Related Service <strong>and</strong> Business Enterprise (SS <strong>and</strong> BE) sector defined as having<br />

investment in fixed assets excluding l<strong>and</strong> <strong>and</strong> building not exceeding Rs. 10 lacs. The SP Gupta<br />

Study Group on Small Enterprises (1999), in its interim report, has recommended that the time is<br />

ripe to move from „Industry‟ to „Enterprise‟ <strong>and</strong> also to include Medium Enterprises within the<br />

SSI sector. This is essential in order to bring Indian SSI sector at par with the global Small<br />

Medium Enterprises (SMEs) sector.<br />

____________________________________________________________________________<br />

INTRODUCTION<br />

DEFINING SMALL SCALE INDUSTRIES & ROLE OF GOVT. AS A FACILITATOR<br />

The definition <strong>of</strong> Small Scale Industries varies from one country to another. In most <strong>of</strong><br />

the countries <strong>of</strong> the world, the criterion for defining a <strong>small</strong> enterprise is related to the size <strong>of</strong><br />

employment. For instance, in the USA, <strong>small</strong> business is one which has employment <strong>of</strong> less than<br />

500 people. In the U.K., it is less than 20 skilled workers, in Sweden <strong>and</strong> Itlay less than 50 <strong>and</strong><br />

500 people respectively. In some countries both employment <strong>and</strong> investment are taken into<br />

account. In Japan, the investment in <strong>industrial</strong> undertaking should not exceed 100 million Yen<br />

employing not more than 300 employees. In South Korea, investment limit is 2 lacs dollars <strong>and</strong><br />

employment being 200 people.The definition <strong>of</strong> SSI in India has changed from time to time. It is<br />

currently defined in terms <strong>of</strong> investment Ceilings on the original value <strong>of</strong> Installed plant <strong>and</strong><br />

machinery is Rs. 1 crore at present.<br />

Table 1 is showing the changes in investment limit in different years.<br />

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IRJC<br />

Asia Pacific Journal <strong>of</strong> Marketing & Management Review<br />

Vol.1 No. 2, October 2012, ISSN 2319-2836<br />

TABLE – 1<br />

EVOLUTION OF INVESTMENT LIMITS FOR SMALL SCALE INDUSTRIES<br />

Year Investment limits Additional conditions<br />

1950 Up to Rs. 0.5 Million in Fixed Assets Less than 50/100 persons<br />

with or without power<br />

1960 Up to Rs. 0.5 Million in Fixed Assets No condition<br />

1966 Up to Rs. 0.5 Million in Fixed Assets No condition<br />

1975 Up to Rs. 1 Million in Plant <strong>and</strong> Machinery No condition<br />

1980 Up to Rs. 2 Million in Plant <strong>and</strong> Machinery No condition<br />

1985 Up to Rs. 3.5 Million in Plant <strong>and</strong> Machinery No condition<br />

1991 Up to Rs. 6 Million in Plant <strong>and</strong> Machinery No condition<br />

1997 Up to Rs. 30 Million in Plant <strong>and</strong> Machinery No condition<br />

1999 to<br />

onward<br />

Up to Rs. 10 Million in Plant <strong>and</strong> Machinery No condition<br />

Source: Udyog Yug (July 2004 issue)<br />

TABLE – 2<br />

INVESTMENT CEILING FOR SMALL SCALE INDUSTRIES (1999)<br />

Type <strong>of</strong> Industry Investment Limit Remarks<br />

Small Scale Industry Rs. 10 Million Historical cost <strong>of</strong> P <strong>and</strong> M<br />

Ancillary Rs. 10 Million At least 50% <strong>of</strong> its output should go<br />

to other Industrial undertaking<br />

Export oriented Rs. 10 Million Obligation to export 30% <strong>of</strong><br />

productions<br />

Tiny enterprise Rs.2.5 Million No location limit<br />

Service <strong>and</strong> Business Rs. 6.5 Million No location limit<br />

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Asia Pacific Journal <strong>of</strong> Marketing & Management Review<br />

Vol.1 No. 2, October 2012, ISSN 2319-2836<br />

Enterprise<br />

Women enterprise Rs. 10 Million 51% equity holding by women<br />

Source: Udyog Yug (July 2004 issue)<br />

The Government has also enhanced the investment ceiling in respect <strong>of</strong> group <strong>of</strong> products<br />

falling under the category H<strong>and</strong> Tools <strong>and</strong> Hosiery to Rs. 5 cores, similar enhancements may be<br />

accorded to several other high tech export thrust items.<br />

Classification <strong>of</strong> Small Scale Industries in India<br />

The SSIs in India are broadly classified into two types: Traditional industries <strong>and</strong> Modern<br />

industries. Both the types <strong>of</strong> SSIs are prevalent in India. Under traditional industries basically<br />

Khadi village industries, h<strong>and</strong>looms, Sericulture etc. are included while modern SSI industries<br />

include <strong>small</strong> <strong>scale</strong>, export oriented ancillaries <strong>and</strong> <strong>small</strong> <strong>scale</strong> service <strong>and</strong> business enterprise.<br />

Traditional<br />

Khadi<br />

Village Industries<br />

H<strong>and</strong>looms<br />

Coir Industries<br />

Sericulture<br />

Cottage<br />

Artisans<br />

Small Scale Industries<br />

Power looms<br />

Modern<br />

Small Scale<br />

Export Oriented<br />

Ancillaries<br />

Tiny Enterprises<br />

Small Scale Services <strong>and</strong><br />

Business Enterprises<br />

With Power<br />

Without Power<br />

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Asia Pacific Journal <strong>of</strong> Marketing & Management Review<br />

Vol.1 No. 2, October 2012, ISSN 2319-2836<br />

ROLE OF GOVERNMENT<br />

Small enterprises assume special position in India because <strong>of</strong> their role as creators <strong>of</strong><br />

large <strong>scale</strong> employment opportunities apart from contributing significantly to <strong>industrial</strong><br />

production, exports <strong>and</strong> regional dispersal. In the next 9-10 years, there may not be drastic<br />

changes in the structure <strong>of</strong> SSIs but some changes may be expected in the composition <strong>of</strong> the SSI<br />

sector in India. In the changed environment only the efficient, viable <strong>and</strong> competitive SSI <strong>units</strong><br />

will survive. The contribution <strong>of</strong> this sector which is currently 40percent <strong>of</strong> <strong>industrial</strong> production<br />

<strong>and</strong> 35percent <strong>of</strong> exports, will further improve. The SSI sector currently provides employment to<br />

192 lacs persons. According to Working Group on 10 th Plan on SSIs, 44.1 lacs additional<br />

employment opportunities would be provided by the end <strong>of</strong> 10 th Plan. This has also been<br />

accepted by Dr. S.P. Gupta Special Group Report (May 2002) on Targeting 10 Million jobs per<br />

year during 10 th Five Year Plan. At present our share in the world trade is only 0.67percent,<br />

which is very low by any st<strong>and</strong>ards. This will have to be improved to 1.5percent in the next 10<br />

years. The target by the end <strong>of</strong> 10 th Plan is to raise share to 1percent. The SSI sector is expected<br />

to be contributing significantly to our national exports; may be to the tune <strong>of</strong> 50percent. For this,<br />

the sector will need certain support so that it is able to overcome the h<strong>and</strong>icaps due to<br />

inaccessibility to economies <strong>of</strong> <strong>scale</strong> <strong>and</strong> the use <strong>of</strong> somewhat obsolete technology, inadequate<br />

<strong>and</strong> delayed supply <strong>of</strong> credit, poor infrastructure etc. Though the policy <strong>of</strong> reservation in the<br />

present form may not exist but the sector will need some support which will help it to attain a<br />

level playing ground. The Comprehensive Policy Package announced by the Prime Minister on<br />

30 th August 2000 may be able to improve the situation with regard to the availability <strong>of</strong> credit<br />

<strong>and</strong> infrastructure <strong>and</strong> in technology up gradation. The role <strong>of</strong> the Government will also undergo<br />

changes from one <strong>of</strong> the protector to facilitator. In fact, during the last ten years i.e. after the<br />

introduction <strong>of</strong> economic reforms, one can discern a change in the role <strong>of</strong> the Government. In the<br />

developing countries, where the infrastructural facilities for development are inadequate <strong>and</strong><br />

entrepreneurial activities are limited, the promotional role <strong>of</strong> government assumes the special<br />

significance. The State will have to assume direct responsibility to build up <strong>and</strong> strengthen the<br />

necessary developmental guidance on promoting technologies through Tool Rooms, Process cum<br />

Product Development Centers, Testing Centers etc. The role <strong>of</strong> the Government in ensuring a<br />

level playing field to SSIs will continue <strong>and</strong> hence fiscal, monetary <strong>and</strong> other incentives will<br />

continue.<br />

The present study is an attempt in that direction with the main purpose to locate the <strong>problems</strong><br />

<strong>and</strong> practices prevalent in these industries. It is a study <strong>of</strong> <strong>problems</strong> <strong>and</strong> <strong>prospects</strong> <strong>of</strong> exporting<br />

<strong>and</strong> non-exporting <strong>small</strong> <strong>scale</strong> industries. So, it will also helpful to boost the export <strong>of</strong> country.<br />

REVIEW OF LITERATURE<br />

The review <strong>of</strong> existing literature is not customary rather an essential part <strong>of</strong> research work. It also<br />

facilitates the comparison between the earlier findings <strong>and</strong> findings <strong>of</strong> present study. Here is the<br />

brief review <strong>of</strong> some studies on the subject.<br />

Mattew, et.al (1998) delineated in his article, “Research <strong>and</strong> Development – Recent Trends” that<br />

India should deliver high quality products by use <strong>of</strong> indigenous advanced technologies.<br />

Industries should upgrade its present facilities <strong>and</strong> products to international st<strong>and</strong>ard.<br />

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Asia Pacific Journal <strong>of</strong> Marketing & Management Review<br />

Vol.1 No. 2, October 2012, ISSN 2319-2836<br />

Collaborating with MNCs can help in developing research <strong>and</strong> development. In formulations,<br />

emphasis should be placed in the production <strong>of</strong> drug delivery system. Research <strong>and</strong> development<br />

can also be used to develop other system <strong>of</strong> medicine.<br />

Tony Tu-Lai Yu (1998) examined the role <strong>of</strong> entrepreneurship in the economic development <strong>of</strong><br />

Hong-Kong. It argues that dynamics <strong>of</strong> Hong Kong‟s economy are attributed largely to adaptive<br />

entrepreneurs who are alert to the opportunities, maintain high degree flexibility in their<br />

production <strong>and</strong> respond rapidly to change. Hong Kong entrepreneurs have shifted their<br />

production activities from one product to another, from one industry to another, from higher cost<br />

to lower cost regions, from tradition fishing <strong>and</strong> agriculture to manufacturing <strong>and</strong> then finance<br />

<strong>and</strong> other services. Their efforts have brought about structural transformation in the economy.<br />

J. Stamely <strong>and</strong> Michael (1998) In International Marketing under the chapter “Exporting not just<br />

for <strong>small</strong> business show the <strong>problems</strong> for <strong>small</strong> exporter <strong>and</strong> found that<br />

A relatively large domestic market <strong>and</strong> lack <strong>of</strong> exposure to other cultures, making the<br />

selection <strong>of</strong> markets <strong>and</strong> identification to customers abroad difficult.<br />

The lack <strong>of</strong> management time <strong>and</strong> general resource.<br />

Controlling the foreign operation, channel, policy <strong>and</strong> physical distribution.<br />

Reaching the foreign markets.<br />

Language problem.<br />

Different safety <strong>and</strong> quality st<strong>and</strong>ard. We can show these <strong>problems</strong> diagrammatically in<br />

this way.<br />

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Asia Pacific Journal <strong>of</strong> Marketing & Management Review<br />

Vol.1 No. 2, October 2012, ISSN 2319-2836<br />

Neelamegam <strong>and</strong> Inigo (1999) in their study on “Managing <strong>small</strong> industries with strong equity”<br />

found that <strong>small</strong> <strong>scale</strong> industries, serving as ancillaries to major <strong>industrial</strong> groups <strong>of</strong>fer vast scope<br />

for venture capital in India. Major <strong>industrial</strong> <strong>units</strong> to keep up upgraded quality st<strong>and</strong>ards. Small<br />

industries may find it hard to switch over to new technology so frequently <strong>and</strong> in that event they<br />

may lose a major client <strong>and</strong> may ultimately collapse. Venture capitalists can be the best<br />

substitutes in many <strong>of</strong> these areas <strong>and</strong> they can save the firm from the crisis by providing not<br />

only equity but also managerial expertise. It may be hard to do so it will require special efforts<br />

by the Government to promote the venture capital in <strong>small</strong> <strong>scale</strong> <strong>units</strong>.<br />

B.D. Jehra (2000) in his paper, “Export orientation for <strong>small</strong> <strong>and</strong> medium enterprises”, discussed<br />

the importance <strong>of</strong> <strong>small</strong> <strong>scale</strong> sector in the economy, over the last five decades. The paper also<br />

highlights the export orientation for <strong>small</strong> <strong>and</strong> medium enterprises in India. The study revealed<br />

that India as a member <strong>of</strong> WTO is bound by its regulations. This poses a number <strong>of</strong> opportunities<br />

e.g. with gradual quantitative restriction on imports <strong>and</strong> a progress reduction in import duties, the<br />

Indigenous manufacturers will have to compete with imports even in domestic market. On the<br />

other h<strong>and</strong>, this would open up many new markets for exports where the country can develop<br />

competitive advantage.<br />

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Vol.1 No. 2, October 2012, ISSN 2319-2836<br />

Sukhpal Singh (2001) in his article on “employment, Efficiency <strong>and</strong> Entrepreneurship in <strong>small</strong><br />

industry: A study <strong>of</strong> the baking industry in Punjab” examines some aspects <strong>of</strong> <strong>small</strong> industry in<br />

context <strong>of</strong> the secondary food processing consumer industry <strong>and</strong> the baking industry in Punjab.<br />

The <strong>small</strong> industries are today, viewed as inefficient, highly capital intensive <strong>and</strong> outdated in<br />

terms <strong>of</strong> production, technology <strong>and</strong> consequently products. The <strong>small</strong> <strong>scale</strong> baking industry also<br />

exhibits low productivity. This industry, as such, is efficient compared to large <strong>scale</strong> sectors <strong>of</strong><br />

the industry. This article looks at the emergence, growth, structure <strong>and</strong> unregistered sector. It<br />

also attempts to assess the present <strong>and</strong> potential role <strong>of</strong> these <strong>units</strong> in the development <strong>of</strong> local<br />

economy <strong>and</strong> tries to draw a policy framework for the development <strong>of</strong> <strong>small</strong> <strong>scale</strong> sector.<br />

The present study is step further to develop sufficient insight leading to formation <strong>of</strong> appropriate<br />

institutional arrangement to strength economic viability <strong>of</strong> <strong>small</strong> <strong>scale</strong> <strong>industrial</strong> <strong>units</strong> in Haryana<br />

<strong>and</strong> else where in country This study will provide essential guidelines to planners, policy makers,<br />

administrators <strong>and</strong> exporters. This will also assist to entrepreneurs to be cautious in planning,<br />

erecting <strong>and</strong> managing their <strong>units</strong>. It also forces the SSI entrepreneurs to enter in world wide<br />

business, so as to avoid common pitfalls resulting dreaded <strong>industrial</strong> sickness.<br />

OBJECTIVES OF THE STUDY<br />

The proposed study is primarily aimed at bringing out the <strong>problems</strong> <strong>and</strong> <strong>prospects</strong> <strong>of</strong><br />

<strong>small</strong> <strong>scale</strong> <strong>units</strong>. Specifically, the objectives are stated as under:-<br />

o To examine the policies <strong>and</strong> practices relating to <strong>small</strong> <strong>scale</strong> <strong>industrial</strong> <strong>units</strong>.<br />

o To find out the differences between <strong>problems</strong> <strong>and</strong> <strong>prospects</strong> <strong>of</strong> exporting <strong>and</strong> nonexporting<br />

<strong>units</strong> followed by them.<br />

o To identify the gaps in those practices which have failed to receive acceptance;<br />

<strong>and</strong><br />

o To specify the <strong>problems</strong> in the existing practices <strong>of</strong> exporting <strong>and</strong> non exporting<br />

<strong>units</strong>.<br />

RESEARCH METHODOLOGY<br />

The present study has adopted descriptive research design. It has taken into account the<br />

survey <strong>and</strong> analysis <strong>of</strong> data <strong>of</strong> a cross section <strong>of</strong> sampling frame. Multi stage r<strong>and</strong>om sampling<br />

method has been used in the study to select sample <strong>units</strong>. First <strong>of</strong> all, on the basis <strong>of</strong> district <strong>and</strong><br />

number <strong>of</strong> <strong>small</strong> <strong>scale</strong> <strong>units</strong> in Haryana, State divided into two zones- low <strong>industrial</strong> develop<br />

zone <strong>and</strong> high <strong>industrial</strong> develop Zone. Under low <strong>industrial</strong> develop zone- Kaithal, Kurukshetra,<br />

Karnal, Jind <strong>and</strong> Panchkula are considered. While Faridabad, Gurgaon, Ambala, Yamuna Nagar<br />

<strong>and</strong> Panipat are taken as a representative <strong>of</strong> high <strong>industrial</strong> develop zone on the basis <strong>of</strong> r<strong>and</strong>om<br />

sampling. At first stage 5 District from each Zone were selected r<strong>and</strong>omly. At the second stage<br />

sample <strong>of</strong> 240 non-exporting <strong>units</strong> <strong>and</strong> 60 exporting <strong>units</strong> were r<strong>and</strong>omly selected. However, 50<br />

<strong>units</strong> were closed among 2003 to 2005. So, fresh selection had to make from the respective<br />

categories to make for the deficiency.<br />

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Asia Pacific Journal <strong>of</strong> Marketing & Management Review<br />

Vol.1 No. 2, October 2012, ISSN 2319-2836<br />

SAMPLE UNITS: A PROFILE<br />

The study shall bring out some <strong>of</strong> the important characteristics <strong>of</strong> sample <strong>units</strong> <strong>and</strong> their<br />

<strong>problems</strong>. These characteristics relate to the form <strong>of</strong> organization, size <strong>of</strong> employment <strong>and</strong><br />

exporting status <strong>of</strong> exporting <strong>and</strong> non- exporting <strong>units</strong>. In addition to this, some allied<br />

information which is derived from the study will also be considered<br />

FORM OF ORGANIZATION<br />

Small <strong>scale</strong> <strong>industrial</strong> <strong>units</strong> carry their business in different form <strong>of</strong> organization. The<br />

popular forms <strong>of</strong> organization are- Sole- Proprietorship, Partnership, Joint Stock Company in<br />

SSIs. Table3.2 gives the classification <strong>of</strong> sample <strong>units</strong> <strong>of</strong> various exporting <strong>and</strong> non –exporting<br />

<strong>units</strong> in this regard.<br />

TABLE-3<br />

FORM OF ORGANIZATION<br />

Particulars Exporting <strong>units</strong> Non-Exporting <strong>units</strong><br />

Frequency %age Frequency %age<br />

Sole Proprietors 23 38.33 125 52.08<br />

Partnership 34 56.67 90 37.50<br />

Joint Stock Company 03 5.00 25 10.42<br />

Total 60 100.00 240 100.00<br />

Source- Questionnaire<br />

Table3 shows the frequency <strong>and</strong> percentage distribution <strong>of</strong> sample <strong>units</strong> in regard to form<br />

<strong>of</strong> organization. The responses indicate that in exporting <strong>units</strong>, partnership is much popular with<br />

56.67percent while in non-exporting, sole proprietorship with 52.08percent is at first place. In<br />

other words, it can be said that maximum non exporting SSI <strong>units</strong> are in the form <strong>of</strong> sole<br />

proprietorship. On the other h<strong>and</strong>, joint stock Company with lowest percentage (i.e.5percent in<br />

exporting <strong>and</strong> 10.4percent in non-exporting <strong>units</strong>) is less popular form <strong>of</strong> organization.<br />

SIZE OF EMPLOYMENT<br />

The classification <strong>of</strong> sample <strong>units</strong> according to the size <strong>of</strong> employment yields some<br />

important results. Under it workers are divided in class interval <strong>of</strong> –less than 20, between 20<br />

to40, between 40to60 <strong>and</strong> more than 60.Rsponses in this regard is presented in table4.<br />

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Vol.1 No. 2, October 2012, ISSN 2319-2836<br />

TABLE-4<br />

SIZE OF EMPLOYMENT<br />

Particulars Exporting Non-Exporting<br />

Frequency %age Frequency %age<br />

Less than 20 37 61.67 100 41.67<br />

20 to 40 10 16.66 80 33.33<br />

40 to 60 06 10.00 40 16.67<br />

More than 60 07 11.67 20 8.33<br />

Total 60 100.00 240 100.00<br />

Source- Questionnaire<br />

Table 4 brings out that about 61.67percent<strong>units</strong> employ less than 20 workers while<br />

16.67percent provides employment to 20to40 workers in sample exporting <strong>units</strong>. On., the other<br />

h<strong>and</strong> , non exporting <strong>units</strong> ,41.67percent <strong>of</strong> <strong>units</strong> are providing employment to less than<br />

20,33.33percent<strong>units</strong> to are providing employment 20 to 40 workers In addition to this,10 out <strong>of</strong><br />

60(16.67percent) in exporting <strong>units</strong> <strong>and</strong> 80 out <strong>of</strong> 240(33.33percent)are providing employment to<br />

more than 60 workers. So, it can be observed that as well as the business size <strong>and</strong> activities<br />

exp<strong>and</strong> then man (labour) is replaced by machinery. The <strong>units</strong> which are providing employment<br />

to more than 60 workers are only 11.67percent <strong>and</strong>8.33percentin exporting <strong>and</strong> non-exporting<br />

SSI <strong>units</strong> respectively.<br />

EXPORTING STATUS<br />

Under exporting <strong>units</strong>, exporters, on the basis activity done may <strong>of</strong> two types-(1)<br />

merchant exporter (2) manufacturer exporter. Merchant exporter deals with exchange <strong>of</strong> goods<br />

produced by others. But, on other side manufacturer exporters are who manufactured those<br />

products which are sold in international market by others. One more categories are there which<br />

deals with both manufacturer <strong>and</strong> merchant exporter. Response <strong>of</strong> sample <strong>units</strong> is presented in<br />

Table5.<br />

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Vol.1 No. 2, October 2012, ISSN 2319-2836<br />

TABLE- 5<br />

EXPORTING STATUS<br />

Particulars Frequency %age<br />

Merchant Exporters 8 13.33<br />

Manufacturer Exporter 7 11.67<br />

Both(1)&(2) 45 75.00<br />

Total 60 100<br />

Source- Questionnaire<br />

Responses obtained in this regard indicate that maximum (75percent) SSI exporting <strong>units</strong><br />

doing both activities for their product that means manufacturing <strong>and</strong> merch<strong>and</strong>ising is done by<br />

same entrepreneurs. In addition to this, percentage <strong>of</strong> manufacturer exporters are 11.67 percent<br />

<strong>and</strong> merchant exporters are only 13.33 percent according to response.<br />

ALLIED INFORMATIONS ABOUT SSIs<br />

Here, the study shall bring out the General information in respect <strong>of</strong> those aspects which<br />

have not been covered under 4 P‟s but have special impact on the development <strong>of</strong> SSIs. These<br />

relate to <strong>problems</strong> faced by SSIs, objectives in terms <strong>of</strong> priorities, factors considered in selecting<br />

market <strong>and</strong> sources <strong>of</strong> information utilized.<br />

PROBLEMS FACED BY SSIs- The SSIs have to face a large number <strong>of</strong> <strong>problems</strong>, including<br />

lack <strong>of</strong> finance (Funds), technological lag, managerial inefficiency etc. The table 6 summarizes<br />

the mean scores awarded by the sample to some <strong>of</strong> the <strong>problems</strong> faced by SSI<br />

TABLE – 6<br />

PROBLEMS FACED BY SMALL SCALE INDUSTRIES<br />

Exporting Units Non-Exporting Units t<br />

Particulars NO Mean St<strong>and</strong>ard<br />

Deviation<br />

Lack <strong>of</strong><br />

Finance<br />

Quality <strong>of</strong><br />

products<br />

NO Mean St<strong>and</strong>ard<br />

Deviation<br />

value<br />

df Sig. (2tailed)<br />

60 1.6333 .93820 240 2.3500 .93871 -5.290 298 .000<br />

60 1.2667 .44595 240 1.1083 .31145 3.205 298 .001<br />

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Lack <strong>of</strong><br />

efficient<br />

executive<br />

Technology<br />

up<br />

gradation<br />

Protection<br />

<strong>of</strong> domestic<br />

trade from<br />

foreign<br />

countries<br />

Terms <strong>of</strong><br />

payment<br />

High cost<br />

<strong>of</strong><br />

production<br />

Regulation<br />

<strong>of</strong> export<br />

market<br />

Exportimport<br />

procedure<br />

<strong>and</strong><br />

regulation<br />

in India<br />

60 1.8333 .99433 240 1.4500 .83691 3.051 298 .002<br />

60 2.2167 .90370 240 2.0917 .94622 .923 298 .357<br />

60 1.3500 .51503 240 1.6917 .87068 -2.913 298 .004<br />

60 2.0000 .00000(a) 240 2.0000 .00000(a)<br />

60 1.5667 .49972 240 1.4792 .50061 1.211 298 .227<br />

60 1.0667 .36204 0(b)<br />

60 1.4167 .76561 0(b)<br />

a t cannot be computed because the st<strong>and</strong>ard deviations <strong>of</strong> both groups are 0.<br />

b t cannot be computed because at least one <strong>of</strong> the groups is empty.<br />

Source- Questionnaire<br />

It is found that the nature <strong>of</strong> <strong>problems</strong> faced by exporting <strong>units</strong> <strong>and</strong> non-exporting <strong>units</strong> is<br />

largely different as shown by significant t-values for most <strong>of</strong> the item statements. In case <strong>of</strong><br />

exporting <strong>units</strong>, the major <strong>problems</strong> are faced in technological up gradation, negotiation on terms<br />

<strong>of</strong> payment <strong>and</strong> marketing inefficiency. The output <strong>of</strong> the exporting <strong>units</strong> has to be sold in the<br />

overseas market <strong>and</strong> they have to match with the international st<strong>and</strong>ards. Therefore, the<br />

exporting <strong>units</strong> have to adopt latest technology. In India, there seems to be a lack <strong>of</strong> awareness<br />

among the managers on technological up gradational <strong>and</strong> such related issues. So, these emerge as<br />

major impediments <strong>of</strong> the SSI engaged in export. The terms <strong>of</strong> payments in export entail long<br />

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operating cycle, extending even up to 6 months. This increases the working capital requirements<br />

<strong>and</strong> also the pr<strong>of</strong>itability <strong>of</strong> these <strong>units</strong>. On the other h<strong>and</strong>, non-exporting <strong>units</strong> have to face<br />

finance <strong>problems</strong> technological lag <strong>and</strong> <strong>problems</strong> regarding terms <strong>of</strong> payment. Finance problem<br />

is a major problem which is faced by non-exporting <strong>units</strong> according to sample response while<br />

technological up gradation is also required because Indian domestic SSIs have to face severe<br />

competition from large industries as well as MNCs. Due to liberalization <strong>and</strong> Globalization<br />

MNCs are coming rapidly in Indian market. Indian SSI industries can only sustain by matching<br />

their product with these MNCs on quality <strong>and</strong> cost basis. So, technological up gradation is also<br />

required by non-exporting <strong>units</strong>. The third major problem faced by non-exporting <strong>units</strong> is terms<br />

<strong>of</strong> payment. Credit sales are the major part <strong>of</strong> total sales <strong>of</strong> Indian Small <strong>scale</strong> industries.<br />

So, this also increases the requirement <strong>of</strong> working capital. So, in brief it can be said that<br />

problem related to technological lag <strong>and</strong> terms <strong>of</strong> payment are the major <strong>problems</strong> equally faced<br />

by exporting <strong>and</strong> non-exporting <strong>units</strong> in addition to other <strong>problems</strong>.<br />

TABLE – 7<br />

OBJECTIVES IN TERMS OF PRIORITIES<br />

Exporting Units Non-Exporting Units t<br />

Particulars No. Mean St<strong>and</strong>ard<br />

Deviation<br />

No. Mean St<strong>and</strong>ard<br />

Deviation<br />

value<br />

df Sig.<br />

(2tailed)<br />

Sales growth 60 1.1500 .36008 240 1.3167 .73163 -1.712 298 .088<br />

To maintain<br />

existing<br />

market share<br />

Higher<br />

market share<br />

Targeted<br />

return<br />

Source- Questionnaire<br />

60 1.7333 .44595 240 1.3417 .67217 4.281 298 .000<br />

60 1.8500 .36008 240 2.8621 .44111 -11.533 298 .000<br />

60 1.8500 .36008 240 1.1034 .30993 9.575 298 .000<br />

The table 7 shows the objectives <strong>of</strong> the concern (in terms <strong>of</strong> priorities). It is found Scores<br />

awarded by the sample to the main objectives <strong>of</strong> concern priority wise. The main objectives <strong>of</strong> a<br />

concern may be sales growth, maintain existing share in market, higher market share <strong>and</strong><br />

targeted return. Table 7 summaries the means that there is significant difference in practices <strong>of</strong><br />

objectives determination both by exporting <strong>and</strong> non-exporting <strong>units</strong> <strong>of</strong> exporting <strong>units</strong> except<br />

sales growth as shown by t-values. In case <strong>of</strong> exporting <strong>units</strong>-higher market share <strong>and</strong> targeted<br />

return are highly preferred because exporting <strong>units</strong> want to capture or enter in more <strong>and</strong> more<br />

markets instead <strong>of</strong> earning pr<strong>of</strong>it. While non-exporting <strong>units</strong> are also considered higher market<br />

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share as a prime objective to create a share in market is much more required for long term gain.<br />

After then, these <strong>units</strong> considered the objective <strong>of</strong> achieving existing market share <strong>and</strong> sales<br />

growth.<br />

FACTORS CONSIDERED IN SELECTING MARKET<br />

Selection <strong>of</strong> market for their product is a crucial decision. Various factors such as socio<br />

cultural factors, market potential, per capita income, life style <strong>of</strong> consumer, extent <strong>of</strong><br />

competition, political stability etc. effect the selection <strong>of</strong> a market. To enter in a particular market<br />

these factors are kept in mind to flourish.<br />

TABLE – 8<br />

FACTORS CONSIDERED IN SELECTING MARKET<br />

Exporting Units Non-Exporting Units t<br />

Particulars No. Mean St<strong>and</strong>ard<br />

Deviation<br />

No. Mean St<strong>and</strong>ard<br />

Deviation<br />

value<br />

df Sig.<br />

(2tailed)<br />

Socio Cultural 60 1.9000 1.0033 240 1.1125 .32959 10.194 298 .000<br />

Market<br />

potential<br />

Per capita<br />

income<br />

Life style <strong>of</strong> f<br />

consumer<br />

Political<br />

stability<br />

Any other<br />

(specify)<br />

Extent <strong>of</strong><br />

competition<br />

Source- Questionnaire<br />

60 1.7000 .46212 240 1.9000 .30063 -4.090 298 .000<br />

60 1.1333 .34280 240 1.7792 .41568 -<br />

11.122<br />

298 .000<br />

60 1.9000 .75240 240 1.7792 .41568 1.672 298 .096<br />

60 1.8000 .98806 240 2.3833 .66827 -5.442 298 .000<br />

60 2.5000 .87333 240 2.1250 .64116 3.747 298 .000<br />

60 2.1167 .32373 240 1.2750 .44745 13.694 298 .000<br />

Sample-responses indicate that extent <strong>of</strong> competition is most considerable factor to select<br />

a market. At second place both socio-cultural factor <strong>and</strong> life style <strong>of</strong> the consumer are considered<br />

by exporting <strong>units</strong>. Political Stability is also a determining factor for selection <strong>of</strong> a market. But<br />

on the other h<strong>and</strong>, non exporting <strong>units</strong> considered political stability as a prime factor to enter in a<br />

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market. Market potential <strong>and</strong> per capita income are then treated subsequently. On the whole, it<br />

can be said, that there is a significant difference in factors consideration by the manufacturers<br />

before enter in a new market between exporting <strong>and</strong> non-exporting SSI <strong>units</strong>.<br />

SOURCES OF INFORMATION UTILIZED<br />

Various sources are utilized for information by SSI <strong>units</strong> for updating the concern <strong>and</strong><br />

also for taking effective decisions. The sources <strong>of</strong> information are business tours, market survey,<br />

published report/journals, dealers/agent, research organization agency (ies) <strong>and</strong> export promotion<br />

council etc. By utilizing these sources the concern is capable to get latest information about<br />

market. Table 9 is presenting the view <strong>of</strong> SSIs in this regard.<br />

TABLE – 9<br />

SOURCES OF INFORMATION UTILIZED<br />

Particulars Exporting Units Non-Exporting Units t<br />

No. Mean St<strong>and</strong>ard<br />

Deviation<br />

No. Mean St<strong>and</strong>ard<br />

Deviation<br />

value<br />

df Sig.<br />

(2tailed)<br />

Business tours 60 1.0167 .12910 240 1.8208 .92681 -6.696 298 .000<br />

Market Surveys 60 1.9833 .12910 240 1.5833 .49404 6.212 298 .000<br />

Published<br />

reports/ Journals<br />

etc.<br />

60 2.2667 .44595 240 1.2458 .45046 15.732 298 .000<br />

Dealers/agents 60 1.3667 .51967 240 1.1208 .33918 4.461 298 .096<br />

Research<br />

organization<br />

agencies<br />

Export<br />

promotion<br />

councils/<br />

commodity<br />

Source- Questionnaire<br />

60 2.1500 .36008 240 1.9000 .99707 1.909 298 .057<br />

60 2.0000 .00000 0(a)<br />

Sample responses regarding utilizing these sources <strong>of</strong> information indicate that exporting<br />

<strong>units</strong> are more frequently using information provided by published report/journals; research<br />

organization agencies export promotion council\commodity <strong>and</strong> market survey. While on the<br />

other h<strong>and</strong>, non-exporting <strong>units</strong> are utilizing sources <strong>of</strong> information such as information provided<br />

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by research organization/agencies are utilized to large extent. In addition to this, business tours<br />

<strong>and</strong> market surveys are other sources which are taken into consideration frequently. It is brought<br />

out on the basis <strong>of</strong> t-values that there is significant difference in practices <strong>of</strong> utilizing the<br />

different sources <strong>of</strong> information both by exporting non-exporting <strong>units</strong>.<br />

MAIN FINDINGS<br />

Here we shall put together some <strong>of</strong> the important points emerging from analysis<br />

undertaken in the preceding chapters. Although the findings are based on data collected from<br />

sample <strong>units</strong> located in Haryana, but these highly represent the <strong>small</strong> <strong>scale</strong> <strong>units</strong> as a whole. For<br />

location <strong>and</strong> other considerations, Haryana is in fact the most ideal State for a study <strong>of</strong> this kind.<br />

It has been found that sole proprietorship is the most dominant form <strong>of</strong><br />

ownership/organization in exporting <strong>and</strong> non-exporting <strong>small</strong> <strong>scale</strong> <strong>units</strong>. But, in non- exporting<br />

SSI sector it is more prevalent. At second place partnership form <strong>of</strong> organization is popular. In<br />

the exporting <strong>and</strong> non-exporting both have their maximum <strong>units</strong> in this form <strong>of</strong> organization.<br />

While, joint stock companies is less popular forms <strong>of</strong> organization in both exporting <strong>and</strong> nonexporting<br />

<strong>units</strong>. Maximum exporting <strong>units</strong> are in partnership form.<br />

Majority <strong>of</strong> <strong>units</strong> (65percent) belonging to non-exporting are young (six to ten years) in<br />

age. In general a positive relationship is seen between age <strong>of</strong> the firm <strong>and</strong> their asset size. While<br />

exporting <strong>units</strong>, on the other h<strong>and</strong>, consists <strong>of</strong> a large proportion <strong>of</strong> <strong>units</strong> which are older (more<br />

than 10 years in age) as compared to non-exporting <strong>units</strong>.<br />

On an average, each unit <strong>of</strong>fers employment to 19 persons. The capital invested per<br />

person indicates the <strong>units</strong> with less investment <strong>of</strong>fer a relatively greater employment potential<br />

than that <strong>of</strong> employment <strong>of</strong>fered by higher investment <strong>units</strong>, because machinery replace the<br />

human being. So, more investment decreases the opportunity <strong>of</strong> employment.<br />

Here, two types <strong>of</strong> <strong>small</strong> <strong>scale</strong> exporter, merchant exporter <strong>and</strong> manufacturer exporter are<br />

taken into consideration. Responses show that maximum (75%) <strong>small</strong> <strong>scale</strong> <strong>industrial</strong> exporting<br />

<strong>units</strong> doing both activities (i.e. merchanting <strong>and</strong> manufacturing) for their product. In addition to<br />

this, percentage <strong>of</strong> manufacture exporter is 11.67 per cent <strong>and</strong> merchant exporter is 13.33 per<br />

cent in <strong>small</strong> <strong>scale</strong> exporting <strong>units</strong>.<br />

Interpretation <strong>of</strong> Problems faced by SSI <strong>units</strong> show that Finance problem is largely faced<br />

by non-exporting <strong>units</strong> while exporting <strong>units</strong> have to face the <strong>problems</strong> like executive<br />

inefficiency, technological lag, <strong>problems</strong> relating to export etc. In addition to this, terms <strong>of</strong><br />

payment is also a major problem which is equally faced by both exporting <strong>and</strong> non-exporting<br />

<strong>units</strong>.<br />

It has been further, observed that the SSI <strong>units</strong> are carrying their business to fulfill the<br />

various objectives. The observation <strong>of</strong> these objectives in term <strong>of</strong> priorities indicates that there<br />

are various objectives such as sales growth, maintain existing share in market, higher market<br />

share <strong>and</strong> targeted return. It is observed that exporting <strong>units</strong> highly preferred higher market share<br />

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<strong>and</strong> then targeted return. While non-exporting <strong>units</strong> consequently prefer higher market share <strong>and</strong><br />

then maintain existing market share <strong>and</strong> sales growth.<br />

Selection <strong>of</strong> market is a crucial decision. Various things are kept in mind to select a<br />

potential market for their products. It is found out that extent <strong>of</strong> competition is the most<br />

determining factor to select a potential market both by exporting <strong>and</strong> non-exporting <strong>units</strong>. After<br />

that socio-cultural factors <strong>and</strong> life style <strong>of</strong> the consumer taken into consideration by exporting<br />

<strong>units</strong>. On the other h<strong>and</strong>, non-exporting <strong>units</strong> considered political stability, market potential <strong>and</strong><br />

per-capita income subsequently while selecting a market.<br />

It is revealed that for collecting information, various sources are utilized by SSI <strong>units</strong>. It<br />

is found out that exporting <strong>units</strong> are more frequently using information provided by published<br />

reports journals, research organization agencies <strong>and</strong> export promotion council. On the other<br />

h<strong>and</strong>, non-exporting <strong>units</strong> are utilizing information provided by research organization agencies,<br />

business tours <strong>and</strong> market surveys in descending order<br />

RECOMMENDATIONS<br />

On the basis <strong>of</strong> the findings, it can be concluded that Haryana‟s SSI are at developing<br />

stage in regard <strong>of</strong> marketing activities. This is specifically true that marketing activities are<br />

pushing force for expansion <strong>of</strong> any concern existing in a economy. Due to various incentives <strong>and</strong><br />

benefits, SSIs concerns are coming into existence rapidly. But, the problem is related to<br />

sustainability <strong>of</strong> these concerns.<br />

The study reveals the basic marketing <strong>problems</strong> related to exporting <strong>and</strong> non-exporting<br />

<strong>units</strong>. It is a well known fact that marketing mix is the combination <strong>of</strong> 4 p‟s i.e. product, price,<br />

promotion <strong>and</strong> physical production. On basis <strong>of</strong> above variables it can be said that marketing<br />

activities start with origin <strong>of</strong> a product <strong>and</strong> continues after sale <strong>of</strong> product in shape <strong>of</strong> post sale<br />

services etc. Recommendations are given on the basis <strong>of</strong> conclusion derived from findings:-<br />

The total installed production capacity in <strong>small</strong> <strong>scale</strong> <strong>industrial</strong> sector in Haryana in<br />

averagely underutilized. In most <strong>of</strong> the cases studied intensively, the capacity utilization<br />

was below 60percent, if full utilization <strong>of</strong> capacity is made then concerns are capable to<br />

reduce the cost <strong>and</strong> capable to increase employment <strong>and</strong> production.<br />

It is also abundantly clear from the present study that the marketing aspects have been<br />

largely neglected <strong>and</strong> concerted efforts for stimulating dem<strong>and</strong> have not been made either<br />

by SSI <strong>units</strong> or state level agencies. Considering the fact that poverty alleviation<br />

programme <strong>and</strong> other development activities <strong>of</strong> the state would make the large masses <strong>of</strong><br />

the country, mainly in rural areas, conscious <strong>of</strong> better living st<strong>and</strong>ards <strong>and</strong> this would<br />

ultimately create huge dem<strong>and</strong> for the consumer goods for mass consumption, the<br />

promotion <strong>and</strong> development <strong>of</strong> <strong>small</strong> <strong>scale</strong> industries holds a key <strong>of</strong> prosperity <strong>and</strong> higher<br />

living st<strong>and</strong>ard in rural Haryana.<br />

There should be a Central All India Marketing Federation with its branches in the State to<br />

assign major responsibility for marketing <strong>of</strong> products <strong>of</strong> such <strong>small</strong> <strong>scale</strong> <strong>industrial</strong> <strong>units</strong>,<br />

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which willingly to become its members. This can be done on the pattern <strong>of</strong> Khadi<br />

Gramodyog Commission which has been rendering commendable services to the Khadi<br />

Industries in the country.<br />

The average entrepreneur in SSI sector is apparently to sell whatever is produced by him.<br />

The marketing approach <strong>of</strong> evolving what is required in the market is missing. It needs to<br />

emphasize that the consumers today expect more value to their expenditure. A properly<br />

conceived <strong>and</strong> speedily implemented marketing support programme for this sector,<br />

therefore the need <strong>of</strong> hour is to introduce the scientific marketing method to improve the<br />

productivity <strong>and</strong> to reduce the unit cost.<br />

Lack <strong>of</strong> efficient executive is also felt. So, the thrust areas like marketing <strong>and</strong><br />

salesmanship besides general entrepreneurship training should be emphasized in the<br />

schools <strong>and</strong> college programme.<br />

Poor quality <strong>of</strong> products, lack <strong>of</strong> st<strong>and</strong>ardization, br<strong>and</strong>ing <strong>and</strong> packaging are some<br />

serious product deficiencies. It is worthwhile to encourage some good SSI <strong>units</strong> to<br />

establish their own laboratories by subsidizing a part <strong>of</strong> initial capital outlay say about<br />

50percentas a subsidy by government. In product development process, the advice <strong>of</strong><br />

technical experts <strong>and</strong> market survey should also be taken into consideration.<br />

To conclude, the ultimate objective <strong>of</strong> prosperity <strong>and</strong> happiness <strong>of</strong> the people can be achieved<br />

only through expansion <strong>of</strong> economic activities, on a massive <strong>scale</strong> in Tiny, <strong>small</strong> <strong>and</strong> large<br />

sectors on the basis <strong>of</strong> the rationality <strong>of</strong> their complementarity. Therefore, need <strong>of</strong> the hour is<br />

strong <strong>and</strong> flourish <strong>small</strong> <strong>scale</strong> sector. Indian economy will become capable to fulfill needs <strong>of</strong> the<br />

huge population as well as to provide sound base for <strong>industrial</strong> progress only with the help <strong>of</strong><br />

strong <strong>small</strong> <strong>scale</strong> sector. For strong <strong>small</strong> <strong>scale</strong> sector, there is need <strong>of</strong> promotive measures<br />

rather than protective measure.<br />

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IRJC<br />

Asia Pacific Journal <strong>of</strong> Marketing & Management Review<br />

Vol.1 No. 2, October 2012, ISSN 2319-2836<br />

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Kurukshetra (1991)<br />

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